Honda Set to Play Catch-Up in Mini-Van Market

By ANDREW POLLACK,

Published: October 17, 1994

TOKYO, Oct. 16—
The Honda Motor Company will try to plug a major hole in its product line on Thursday when it introduces its first mini-van. The name of the van, Odyssey, couldn't be more appropriate.

That is because the Odyssey is only the first step in what is likely to be a long journey for Honda, as it tries to catch up in a booming part of the vehicle market that it has ignored for years.

Honda officials have said they hope to make up for their late start by creating a new type of vehicle, one that offers the space of a mini-van with the maneuverability of a car. Of course, that is the same claim made when Nissan and Mercury teamed to introduce the Mercury Villager/Nissan Quest mini-van in 1992.

Analysts say the Odyssey, which will go on sale immediately in Japan and early next year in the United States, does have some innovative features. But, it also has shortcomings, including a high price and small engine, both of which will limit its appeal in the American market, they quickly add.

"It's a very good vehicle, but it's not fully competitive with the U.S. vans," said Chris W. Cedergren, senior vice president of AutoPacific Inc., a consulting concern in Santa Ana, Calif. "What they're trying to do is get their feet wet."

Honda has fairly limited ambitions. To start, it is planning to sell about 30,000 vehicles a year in the United States. By contrast, the Chrysler Corporation is expected to sell more than 500,000 of its Dodge Caravan and Plymouth Voyager vans this year.

The Odyssey sounds as though it will share several characteristics with Toyota's Previa mini-van, which was introduced in the United States in 1990. Praised for its reliability, quality control and creature comforts, the Previa has drawn a lukewarm response from the public, largely because it costs more than its American rivals and comes only with a four-cylinder engine.

The Odyssey should do somewhat better in Japan because its relatively small size seems more suited to the market here.

Honda has always believed in focusing on passenger cars, ignoring commercial vehicles. That philosophy caused it to miss out on the fast-growing markets for mini-vans, pickup trucks and sport-utility vehicles in the American market, an egregious blunder for a company that sells more cars in the United States than it does in Japan.

Lumped together, this category of vehicles known as light trucks accounts for about 40 percent of the American market, and Honda remains the only major manufacturer that does not compete in those categories. Mini-vans and sport-utility vehicles are also catching on in Japan.

About 1.4 million mini-vans will be sold in the United States this year, up from fewer than 900,000 in 1991, but the rapid growth in the category is expected to slow down soon. Without a mini-van, Honda has lost customers who were loyal to its Civic and Accord but needed more room as their families grew larger. One solution, the Accord station wagon, has not fared well in the United States.

Japanese companies in general have been late and relatively unsuccessful with mini-vans, sport-utility vehicles and pickups. That, plus the rise of the yen, which has made Japanese vehicles more expensive, have contributed to the comeback of Detroit's Big Three auto makers.

Chrysler, which pioneered in mini-vans 12 years ago, has particularly profited from the van boom.

Honda executives in Japan have been gushing for a year about how innovative the new mini-van will be. Company engineers code-named the Odyssey "P.J." -- for personal jet. And the company has been running teaser advertisements in Japan for its "creative mover," featuring the Addams Family.

The new vehicle is indeed carlike in some respects and is based on the chassis used in the popular Accord. It is somewhat narrower and shorter than most mini-vans in the United States. It has four conventional car doors, as in a sedan, rather than the rear sliding door found in most mini-vans.

The Odyssey also has a four-cylinder 2.2-liter gasoline engine, smaller than the V-6 engines common in American mini-vans.

The Odyssey will also be costly. In Japan, the base model will start at about 2 million yen, or about $20,000. In the United States the Odyssey is expected to sell for $22,000 to $26,000, compared to a price range of $18,000 to $25,000 for many competitors. The American vans will come with standard dual air bags, anti-lock disk brakes and a body that meets crash test standards for cars.

One reason for the high price in the United States is that the van will be manufactured in Japan and its export price will reflect the strength of the yen. It is unlikely that production of this particular model will be shifted to the United States because sales volumes will not be high enough.

Honda officials declined to speak in detail about the Odyssey before Thursday's introduction, and company officials in the United States and Japan declined to make photos available.

The van comes in versions that seat six or seven. The rear seat can fold into the floor and the middle seats can fold up behind the front row, leaving a huge space for cargo. The middle seats can also fold down backwards into what is practically a bed.

Honda has already developed a V-6 engine that will go into the Accord, and that engine will also eventually become an option for the Odyssey. By the year 2000, Mr. Cedergren of AutoPacific predicted, Honda will introduce a mini-van designed and manufactured in the United States and aimed more specifically at the American market.

Honda is also trying to fill its lineup for sport-utility vehicles, though it is doing this mostly through links with other companies.

Honda this year began selling the Isuzu Rodeo as the Honda Passport in the United States. Some 17,000 Passports have been sold this year and the vehicle, made in Indiana, is in short supply. In Japan, Honda sells Chrysler's Jeep, as well as recreational vehicles from Isuzu and Rover.

Officials here say Honda and Isuzu are discussing a broader product sharing. One idea is to allow Honda's high-end Acura division to sell Isuzu's Trooper, a sport-utility vehicle that is larger than the Rodeo. Meanwhile, Isuzu would be allowed to sell the Odyssey in the United States under its own brand name.

Honda is also developing a small sport-utility vehicle based on its Civic subcompact car.

But Honda has no intention of moving into the pickup truck market. That, a spokesman said, is too far afield from Honda's traditional passenger cars.

Photo: The new Honda Odyssey mini-van as photographed in a Japanese automobile magazine. Honda has declined to make photographs available in the United States, where the Odyssey will go on sale in 1995. (New Model Magazine)